GREEK DEBT

CRISIS
Arboleda. Caina. Castor. Colonia. Policarpio.
Objectives

■ To be able to understand what happened during the

Greek debt crisis, what caused it, and how the
people of Greece were affected
■ To be able to determine the timeline of events during
the Greek debt crisis
Topic Outline

Overview
Causes
Internal
External
Effects
Timeline (2009-2018)
Overview

■What is the Greek debt crisis?

Causes

■ External
– Great Recession
– Eurozone = no monetary policy flexibility
Causes
■ Internal
As reported by the Greek Ministry of Finance in 2010
– Government deficits
■ Fiscal imbalances from 2004-2009
– Government debts
■ 127% debt-to-GDP ratio in 2009
■ higher government deficit and higher debt-service
costs
Causes
■ Internal
– Poor GDP growth
■ Tourism and shipping
– Budget compliance
■ due to economic control being more lax in a year with
political elections
– Data credibility
■ Misreported data made it impossible to predict GDP
growth, deficit and debt
Causes
■ Others
– Excess government spending
■ Military expenditures, public sector jobs, pensions, and other social
benefits
– Current account deficits
■ Large foreign financial surplus
– Tax evasion and corruption
■ The ability to pay debts depends greatly on the amount of tax
the government is able to collect
■ Self-employment and “underground/shadow economy”
Effects

■ The people of Greece are facing further years of economic hardship

following a Eurozone agreement over the terms of a third bailout.
■ The deal included more tax rises and spending cuts, despite the Syriza
government coming to power promising to end what it described as
the "humiliation and pain" of austerity.
■ This dreadfully affected the economic growth of Greece, the people of
Greece and also affected the European countries.
■ It is becoming a global crisis.
 The Long Recession
 Decrease in the Greek Per Capita GDP
 Large Increase in Gov’t Spending
 Greece Leading in Inflation
 Unemployment Increase
 Deprivation to Resources/Needs
 Mental Well-Being
 Migration
 Timeline
20 20 20 20 20
09 10 11 12 13

Greece's credit Avoided Substantial Second First decisive

rating is default risk of default bailout step to exit
downgraded (First bailout) bailout
 Timeline
20 20 20 20 20
14 15 16 17 18

Sale of long- Effective Debt relief Lessened Received final

term gov’t default. budget targets. loan.
bonds Agreed on a Implemented Committed to
third bailout. increase in tax running a
and pension budget surplus
reforms. until 2060
END